Amazon.com, Inc. (NASDAQ:AMZN) attaining 10 million subscribers on Prime Service continues to elicit debate in Wall Street as to whether the milestone marks the beginning of a turnaround having been struggling year long. During an interview on CNBC, Keene on The Market’s, James Ramelli, reiterated that Amazon will continue to struggle with suppressed profit margins in 2015 with Robert W. Baird’s Colin Sebastian remaining bullish of the company’s prospects.
The unveiling of the Prime Service in line with the holiday shopping frenzy might have worked to the Amazon’s advantage in terms of sales waiting to see if the same momentum will continue heading into 2015. Just like other analysts Ramelli remains bearish on Amazon lifting itself from the debacle of thin margins as the company has resorted to pursuing growth opportunities instead of focusing on generating shareholder value.
“The SMP is going to close this year higher by around 13%. We are going to see a huge move lower in Amazon.com, Inc. (NASDAQ:AMZN). It was not loved in this rally and the main reason for that is that Amazon continues to see investments outside of their core business. That are trimming their profit margins that are already razor thin,” said Mr. Ramelli.
Robert Baird’s, Colin Sebastian, on the other hand, remains bullish on Amazon prospects heading into 2015 especially if the company is to devise a way of monetizing its growing numbers on Amazon Prime service. The analyst affirms that Amazon.com, Inc. (NASDAQ:AMZN) stock remains a long term investment opportunity as the race for growth opportunities continue to gain momentum.
Amazon.com, Inc. (NASDAQ:AMZN) move to focus on shipping and discounts as opposed to marketing according to Sebastian is poised to work to its advantage in attracting more members especially on Prime going into 2015. The growth opportunities for the giant retail store according to the analyst remain endless as the company is only a quarter of Walmart.
“The company leadership is focused on significant growth opportunities in the markets of retail technology and media. They don’t manage to a particular quarter or even a particular year and so as an investor although we think margins have likely bottomed down here. They are less likely to move lower at this point we do think it requires some patience,” said Mr. Sebastian.
Monetization of some of the business opportunities that Amazon.com, Inc. (NASDAQ:AMZN) has pursued this year has remained the biggest challenge with many investors calling for the company to focus on its core business. Ramelli expects Amazon to benefit from improved customer purchasing power with a further decline in gas prices with the same expected to get worse should the prices reverse and start surging again.
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